Joint Comment Letter to CFPB on Defining Larger Participants

Dear Director Chopra:

This letter is submitted on behalf of the American Bankers Association and the Consumer Bankers Association. We appreciate the opportunity to provide comments on the proposed rulemaking Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications issued on November 17, 2023.

We are pleased that the Consumer Financial Protection Bureau (CFPB) is establishing supervisory authority over large nonbank providers of general-use digital payment applications. It is essential that the same consumer protections that are provided by banks to their customers be provided by nonbanks to their own customers when those nonbanks offer the same services. Therefore, supervision of consumer protections should be consistent across the industry regardless of whether the provider is a bank or nonbank. CFPB supervision in conjunction with examinations will help to improve consumer protection in what is now an underregulated area.

Recommendations

We support the test in the proposed rule that would identify covered nonbanks by the type of payment service provided and the annual transaction limit of 5 million per year, with the Small Business Administration (SBA) size standard exemption. The proposed rule indicates that this test would result in 17 covered entities.

We recommend that the CFPB reevaluate these test limits on an ongoing basis to ensure that they cover an appropriate number of nonbank payment providers. The CFPB should make these analyses publicly available when they are completed.

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